People Express owed Newport News airport twice what had been reported

People Express Airlines owed Newport News/Williamsburg International Airport almost twice as much in fees as the airport's former executive director asked it to pay.

The startup airline owed the airport nearly $209,000 in passenger facility charges — fees airlines collect and are required by law to turn over to airports — a new review by the Peninsula Airport Commission found. The commission took a new look after the Daily Press asked for information about the unpaid fees.

A bit more than a month after People Express stopped flying, former Executive Director Ken Spirito informed the airline it owed $115,000 in those fees, after telling it to pay the fees or be evicted from the terminal, airport email records show.

In addition to the unpaid passenger fees, the airport also wrote off more than $51,000 in rent, utilities and fees for security badges that People Express never paid, airport commission interim Executive Director Sandy Wanner said in response to a Daily Press question about the company's debts.

Spirito had said those unpaid bills amounted to $18,000 when he evicted People Express from the airport's main terminal in November 2014 and from its offices in the old terminal in January 2015.

People Express began flying in June 2014 and stopped in September 2014.

Spirito had formally demanded payment of the passenger fees, without specifying the amount owed, in an email to People Express on Oct. 10, 2014, telling the company it had a month to turn the fees over or be evicted from the terminal.

Less than four months earlier, the Peninsula Airport Commission had agreed to guarantee a $5 million line of credit that TowneBank extended to the airline, which had transferred the full amount to its accounts by the time Spirito asked for the fees.

On Oct. 29, 2014, Spirito asked TowneBank what he would have to do to freeze People Express' bank account and assets. The TowneBank loan officer handling the line of credit said she wasn't sure, adding that "yesterday there was nothing substantial in the accounts."

Spirito then emailed People Express telling the company it owed the airport $115,211, based on its traffic. The passenger facility charge of $4.50 is levied on each passenger boarding an airplane, and airlines are supposed to turn over $4.39 to the airport where the passenger boarded.

In the days that followed, Spirito pressed the commission's lawyer at the time, TowneBank Peninsula board member Herbert V. Kelly Jr., to see if the airport could seize an insurance payment due to People Express from the September tarmac accident that halted its service.

Kelly said there were no legal grounds to do so.

A few days after that, on Nov. 5 2014, the TowneBank loan officer handling the People Express account reported that an insurance check for $50,000 had landed.

With the fees still unpaid, and Kelly's advice that an earlier payment of $650,000 to Vision Airlines, the Nevada firm that actually operated the People Express flights, was not refundable, Spirito forwarded a 2013 newspaper story that said Vision had been charged with grand theft for not paying fees owed a Florida airport to Jim Bourey, who was then the Newport News city manager and airport commission chairman.

"If we pursue with them we will just send them into bankruptcy at this point and get nothing," Bourey replied. In bankruptcy cases, a federal court tallies assets and debts and tries to come up with a plan to pay at least some of what a debtor owes.

The airport repaid an overdue interest payment of $13,993 that People Express owed TowneBank on Dec. 8, 2014. Using a combination of state, local and federal taxpayer money, it paid off the remaining $4.5 million People Express owed TowneBank in April 2015.

It was not until January 2017, after a Daily Press report about the loan payment, that the commission told state officials it had used state taxpayer funds to guarantee and then repay the bulk of People Express' debt to TowneBank. The commission used local taxpayers' funds and a federal grant to cover the rest.